Boeing
Co. is set to win an order this week from United
Continental Holdings Inc. (UAL) for 100 of the planemaker’s 737 jets in a
transaction that may be valued at about $8.4 billion, people familiar with the
matter said.
The accord includes options for as
many as 100 more jets and will be announced July 12 in Chicago, where
both companies are based, said two of the people, who asked not to be
identified because details aren’t public. The order will include the upgraded
737 Max model, the people said.
A deal later this week would be a
boost for Boeing as it promotes the Max at the Farnborough International Air
Show outside London.
The company wasn’t offering the jet at the June 2011 expo in Paris, where
Airbus SAS routed Boeing with sales and commitments for its revamped
single-aisle A320neo.
“It’s one of many positives for
Boeing,” said Ray
Neidl, a Maxim Group LLC analyst who covers Boeing and United. “We all knew
for a long time the airlines were starving for a more fuel-efficient
narrowbody. Now that one’s available in the next few years, airlines are
falling over themselves to get them.”
Boeing opened the air show today by
announcing a $7.2 billion order for 75 single-aisle 737 Max aircraft from Air
Lease Corp. (AL), the first such purchase by a lessor. General
Electric Co. (GE)’s jet-leasing unit also is poised to purchase 100 737s,
people familiar with that transaction said.
Exclusive
Supplier
United’s mix of Max jets and current
737s will determine the list value of its order. The 737-8, the top-selling
existing model, retails for $84.4 million, and the Max 8, the equivalent new
plane, is $95.5 million, according to Boeing’s website.
The order is United’s first since the
2010 merger creating the carrier from former United parent UAL Corp. and
Continental Airlines Inc. Boeing was Continental’s exclusive plane supplier for
two decades, and the accord deepens ties between the world’s largest airline
and the biggest aerospace company.
United declined to comment, said
Christen David, a spokeswoman. A Boeing spokesman, Tim Bader, said the company
had no comment.
Boeing rose 0.5 percent to $74.03 at
the close in New
York. United fell 1.4 percent to $23.90, declining along with most carriers
in the Bloomberg U.S.
Airlines Index. (BUSAIRL)
United held talks over about six
months on a possible mixed order of current and new-model 737s and A320s before
opting to stay with Boeing, people familiar with those discussions said in
April.
Planemaker
Competition
The U.S. planemaker is trying to
reclaim the top spot in commercial production lost to Airbus in 2003. Toulouse,
France-based Airbus had record orders of 1,419 aircraft in 2011, while Boeing’s
tally was 805. Airbus won 95 percent of narrow-body sales at the Paris show,
and has said 2012 orders may fall by half as an initial flurry of A320neo
purchases wanes.
United’s order will make it the last
of the four biggest U.S. carriers to announce single-aisle jet purchases in
less than a year.
Delta Air Lines Inc. agreed in August
to acquire 100 737s, a month after AMR Corp.’s American
Airlines split a record order for 460 jets between Boeing and Airbus.
Southwest Airlines Co. agreed in December to buy 208 737s in an order that was
the first for the Max.
Boeings make up about 78 percent of
United’s mainline jets, with the rest made by Airbus. The 555-plane regional
fleet is split about evenly between Bombardier Inc. (BBD/B)
and Embraer SA. (EMBR3)
United
Fleet
Narrow-body jets made up 78 percent,
or 545 planes, of United’s 701 mainline planes, according to its latest annual
report. Boeing 757-200s are the oldest of United’s single-aisle jets, with an
average age of 18.2 years, followed by 737-500s that average 16.6 years old.
Both models are out of production.
Separately, United said today it
plans a special livery for the Boeing 787 Dreamliners it will begin receiving in
September, with a gold line running along the fuselage. United, the first North
American carrier to receive the composite-plastic plane, expects to start flying
five of the jets this year.
The airline has firm orders for 50
Dreamliners with deliveries through 2019.
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